Year-End Tips for Payroll #5

This will sound obvious, but: Be as prepared as you can be for multiple changes that will occur on January 1st.  For example, if you are a New York City employer, you already know that you are required to offer transportation benefits to your employees (if you have 20 0r more employees in New York City).  Have you taken all the necessary steps to implement this change?  Have you identified a vendor to assist with the transit benefit administration?

Also, the new law passed by Congress last week provides for permanent parity between transit and parking benefits.  This will allow for higher pre-tax deduction amounts for transit benefits.

The parity is retroactive to January 1, 2015.  Do you have your true-up calculations and refunds completed so that they can be processed in December?  Remember, the alternative is W-2C’s issued to each affected employee.

Be prepared, and the year-end process won’t be so stressful or scary!

Year-End Tips for Payroll #4

By now, you should have a good idea of your year-end schedule, as well as any items that need to be addressed by the Payroll, Benefits and HR Teams.  If you haven’t already done so, call a meeting of the team leads for these and any other teams that affect payroll’s year-end process.

Choose the most practical format: conference call, video conference, face-to-face meeting, and develop an agenda.  The agenda is crucial, so that you can stay on task.  Each team will probably have some items to discuss, so reach out to them prior to the meeting and ensure that everyone’s concerns are addressed.

Your meeting should also include the Compensation team lead, in case of any contractual items that need to be addressed.  For example, you may have a repayment or payment obligation to be scheduled before December 31.  There may be some moving expenses to be considered, so make sure that the Accounts Payable Team is also included.  Request that the AP team review payments to employees so any reporting issues can be addressed as well.

Ask again if there are any outstanding payments that have to be made in 2015, and ensure that a special off-cycle payroll or one-time payment can be processed quickly.  Find out if any scheduled payments have been moved to 2016.

Remember that December days pass quickly due to holidays and last-minute vacations, so assume that you won’t be able to reach most folks by next week!   Try to take it all in stride, and enjoy December!


FUTA Credit Reductions Update

As noted by BNA, this year brings an unprecedented event to Connecticut employers.  They will enjoy the dubious distinction of having the highest FUTA (Federal Unemployment Tax) rate in history.

Here’s how this happened:  Connecticut employers will pay the standard FUTA rate of .6% (assuming compliance with all other rules).  In addition, they will pay a 1.5% credit reduction rate for un-repaid advances, bringing the employer rate to 2.1%.  Finally, Connecticut employers will have to pay an additional .6% so-called BCR add-on credit reduction.  See below for the reasoning, and follow this link to read the full article from BNA.

Connecticut employers are to be assessed a BCR add-on for 2015 because the state had a federal unemployment loan balance on Jan. 1 of at least five consecutive years and the state did not apply for relief from the BCR add-on.

Some states will escape the credit reduction costs for 2015.  Indiana, Kentucky, New York and North Carolina will have no credit reductions for 2015.

If you are an employer, verify your actual FUTA rate before December 15, so that you can make any additional FUTA deposits timely before the end of the year.